Union bosses have backed the employment package offered by Jingye Group after 10 days of "extremely challenging" discussions, revealing up to 500 jobs are at risk if the deal completes.
The National Trade Union Steel Co-ordinating Committee has been in dialogue with the successful Chinese bidder, and has endorsed the proposals put forward, with a strong focus on a £1.2 billion investment plan.
Representatives of Community, Unite and GMB said it “would transform the business and secure the future of British Steel”.
The tough call came as special managers brought in by the Official Receiver made clear there would not be another sales process for the entire entity should the Jingye deal not get over the line, with the company facing being broken up and sold in parts.
Union leaders were also faced with the possibility of new contracts being offered with statutory minimum terms due to British Steel being in liquidation, with more than 4,000 employees awaiting their fate, predominantly in Scunthorpe and the North East.
“These discussions have been extremely challenging but with British Steel in liquidation it is clear that if the business is to survive change is required,” the unions said in a joint statement.
The reduction of headcount intended by Jingye could be mitigated by the “significant numbers who have recently left the business”, and the statement said they will be subject to ongoing detailed discussion at departmental level. “This is not something that the unions could endorse and we have made the argument that the business needs to ensure the plant can be run efficiently and safely,” they added.
“We have consistently advised that for the sale to complete and for the business to be successful under new ownership, retaining high quality jobs with good terms and conditions would be vital.
“Therefore, we felt it was important that the unions engaged fully to shape Jingye’s proposals on the employment package. The unions adopted a number of principles through the discussions. Key points being ensuring any changes do not disproportionately affect employees differently, protecting shift premia and avoiding reductions in regular take home pay. We believe we have secured a broadly positive outcome on each of these points.
“The sale to Jingye is now firmly in sight and we would encourage all stakeholders in the business to focus on reaching a positive conclusion.”
British Steel was placed into compulsory liquidation in May when debts of £880 million were revealed at a High Court hearing.
An initial exclusivity period was entered into with Turkish business Atear Holdings, but it didn’t result in an offer, and Jingye flew in.
Due diligence completed in November, with a deal in principal agreed with the Official Receiver.
Alasdair McDiarmid, operations director for Community, said: “We used the opportunity to shape Jingye’s proposals in the best interests of our members. Faced with challenging circumstances we believe that the dialogue between Jingye and the unions has produced a better deal for employees than what was otherwise on the table. We look forward to working with everyone to securing the future of British Steel under Jingye’s ownership.”
Harish Patel, National Officer for Unite, said: “Everyone wants to see British Steel survive and thrive. Crucial to that will be Jingye delivering on their ambitious investment plans. If employees are making sacrifices, then they need to see that this is done in return for investment that can make the business successful and secure jobs for the long-term.”
Ross Murdoch, National Officer for GMB, said: ““In endorsing this package in principle, the trade unions believe they have struck the right balance between delivering cost savings and maintaining jobs with decent terms and conditions to drive the new business forward. It also includes a positive and innovative business plan for the future, which hopefully will secure employment for many years going forward.”
